Advanced Micro Devices Inc. (NASDAQ: AMD) Upgraded by KeyBanc to Overweight

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Advanced Micro Devices Inc. (NASDAQ: AMD) stock fell 1.12% (As on Jan 13, 11:03:16 AM UTC-4, Source: Google Finance) after analysts at KeyBanc boosted their rating and price target for the chipmaker, citing growth in data center demand and the impact of its $35 billion takeover of Xilinx. KeyBanc Capital Markets analyst John Vinh lifted his rating on AMD to ‘overweight’, with a price target of $155 per share, on the basis that demand for its data center chips should “meaningfully outpace” growth in the broader industry, particularly given the links to flexible CSP contracts with tech giants Microsoft. AMD’s pending takeover of Xilinx, which it expects to complete by the end of the current quarter, will add a new dimension of programable FPGA semiconductors to the chipmaker’s arsenal, Vinh noted, which will “position it well for the long-term transition to heterogeneous compute architectures.”

For the fourth quarter 2021, AMD expects revenue to be approximately $4.5 billion, plus or minus $100 million, which is an increase of approximately 39 percent year-over-year and approximately 4 percent quarter-over-quarter. The year-over-year increase is expected to be driven by growth across all businesses. The quarter-over-quarter increase is expected to be driven by higher server and semi-custom revenue. AMD expects non-GAAP gross margin to be approximately 49.5 percent in the fourth quarter 2021.

For the full year 2021, AMD now expects revenue to grow approximately 65 percent driven by growth across all businesses, up from prior guidance of 60 percent growth. AMD expects non-GAAP gross margin to be approximately 48 percent for the full year 2021

For the third quarter of 2021, revenue was $4.3 billion, up 54 percent year-over-year and 12 percent quarter-over-quarter driven by higher revenue in both the Computing and Graphics segment and Enterprise, Embedded and Semi-Custom segment.

Meanwhile, the company has announced Amazon Web Services, Inc. (AWS) has expanded its AMD EPYC processor-based offerings with the general availability of the new Amazon EC2 Hpc6a instances, which are purpose-built for high performance computing (HPC) workloads in the cloud. According to AWS, Amazon EC2 Hpc6a instances deliver up to 65 percent better price-performance compared to similar Amazon EC2 instances. Hpc6a will help customers run their most compute-intensive HPC workloads like, genomics, computational fluid dynamics, weather forecasting, financial risk modeling, EDA for semiconductor design, computer-aided engineering, and seismic imaging.

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